Regulatory Matters (Tables)

12 Months Ended

Dec. 31, 2025

Regulated Operations [Abstract]

Schedule of Capital Structure and Cost of Capital

the following proposed capital structure and costs of capital:

	Capital Structure		Cost of Capital
Long-term debt	47.65	%	4.26	%
Common stock equity	52.35	%	10.70	%
Weighted-average cost of capital			7.63	%

Schedule of Changes in the Deferred Fuel and Purchased Power Regulatory Asset

The following table shows the changes in the deferred fuel and purchased power regulatory asset (dollars in thousands):

	Year Ended December 31,
	2025		2024
Balance at beginning of period	$	287,597	$	463,195
Deferred fuel and purchased power costs	324,482		250,288
Amounts charged to customers	(463,011)		(425,886)
Balance at end of period	$	149,068	$	287,597

Schedule of Regulatory Assets

The detail of regulatory assets is as follows (dollars in thousands):

	Amortization Through	December 31, 2025		December 31, 2024
Pension	(a)	$	723,042	$	750,976
Income taxes — AFUDC equity	2054	203,890		192,936
Palo Verde sale leaseback noncontrolling interests’ acquisition (b)	N/A	151,506		—
Deferred fuel and purchased power (c) (d)	2026	149,068		287,597
Ocotillo deferral	2034	99,931		114,775
Lease incentive (Note 20)	2045	90,005		70,541
SCR deferral (c)	2038	77,186		83,123
Retired power plant costs	2031	56,809		68,380
Income taxes — investment tax credit basis adjustment (Note 5)	2056	42,459		34,834
Deferred compensation	2036	32,204		33,108
Deferred fuel and purchased power — mark-to-market (Note 13)	2026	29,330		42,275
FERC transmission true up	2027	21,471		35,159
DSM (c)	2025	15,706		—
Deferred property taxes	2027	15,349		23,918
Palo Verde VIEs (Note 12)	2046	8,582		20,611
Mead-Phoenix transmission line — contributions in aid of construction	2050	8,052		8,384
PSA - interest	2026	5,679		11,525
Loss on reacquired debt	2038	5,653		6,682
TEAM (c)	2031	3,879		4,534
Active union medical trust	(e)	3,696		9,673
Navajo coal reclamation	2026	2,516		7,905
Other	Various	3,353		3,522
Total regulatory assets (f)		$	1,749,366	$	1,810,458
Less: current regulatory assets		$	286,009	$	420,969
Total non-current regulatory assets		$	1,463,357	$	1,389,489

(a)This asset represents the future recovery of pension benefit obligations and expense through retail rates.  If these costs are disallowed by the ACC, this regulatory asset would be charged to other comprehensive income/loss and result in lower future revenues.  The 2022 Rate Case decision allows for the full return on the pension asset in rate base. See Note 9 for further discussion.

(b)This asset relates to the acquisition of previously leased interest in Palo Verde Unit 2. See Note 12.

(c)See “Cost Recovery Mechanisms” discussion above.

(d)Subject to a carrying charge.

(e)Collected in retail rates.

(f)There are no regulatory assets for which the ACC has allowed recovery of costs, but not allowed a return by exclusion from rate base. FERC rates are set using a formula rate as described in “Transmission Rates, TCA, and Other Transmission Matters.”

Schedule of Regulatory Liabilities

The detail of regulatory liabilities is as follows (dollars in thousands):

	Amortization Through	December 31, 2025		December 31, 2024
Excess deferred income taxes - ACC — Tax Cuts and Jobs Act (a)	2046	$	847,572	$	888,896
Excess deferred income taxes - FERC — Tax Cuts and Jobs Act (a)	2058	200,161		207,400
AROs and removal costs	(b)	286,907		358,403
Other postretirement benefits	(c)	233,952		238,113
Four Corners coal reclamation	2038	97,988		77,532
Income taxes — deferred investment tax credit	2056	81,949		66,327
Income taxes — change in rates	2054	56,260		59,133
RES (d)	2026	54,551		68,523
DSM (d)	2025	26,228		23,927
Sundance maintenance	2031	25,668		23,086
Spent nuclear fuel	2027	20,492		26,818
TCA Balancing Account (d)	2027	4,860		14,834
TEAM (d)	2032	3,738		4,343
Deferred fuel and purchased power — mark-to-market (Note 13)	2028	3,641		—
Other	Various	3,063		4,898
Total regulatory liabilities		$	1,947,030	$	2,062,233
Less: current regulatory liabilities		$	210,909	$	206,955
Total non-current regulatory liabilities		$	1,736,121	$	1,855,278

(a)For purposes of presentation on the Statements of Cash Flows, amortization of the regulatory liabilities for excess deferred income taxes are reflected as “Deferred income taxes” under Cash Flows From Operating Activities.

(b)In accordance with regulatory accounting, APS accrues removal costs for its regulated assets, even if there is no legal obligation for removal.

(c)See Note 9.

(d)See “Cost Recovery Mechanisms” discussion above.